Fendi’s Turnaround Plan: More Stores, Products To Build a $500M Brand

Fendi is gunning to become a profitable $500 million fashion house and won’t pin its hopes on a hit handbag, but on a sound business strategy.

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He also spies growth potential in eyewear, citing Dior’s track record as a role model. At present, Fendi has two eyewear licensees: Marchon for the U.S. and De Rigo for the rest of the world. Come 2005, Marchon takes the global lead.

On the fragrance front, Fendi’s license is currently held by Yves Saint Laurent Beauté, part of Arnault archrival François Pinault’s luxury holdings. That license expires in 2005, and Burke vowed to move quickly to launch new products under the auspices of LVMH.

Toledano said the beauty category will bring “brand energy and momentum” to the franchise.

But distribution is perhaps the most ambitious goal, converting Fendi from a wholesale dependent company to one where a majority of revenues, at least 75 percent, stream in from a network of directly owned stores.

Today, the network counts 103 locations — with the goal of 150 stores by 2007. Key openings next year include South Coast Plaza in Costa Mesa, Calif.; Bellagio in Las Vegas; Osaka; Beijing; Seoul, and the long-shuttered flagship in Rome.

As noted, Fendi sold the lease for its Fifth Avenue flagship to Abercrombie & Fitch, and Burke disclosed that the Italian company is simply decamping across the street, to 677 Fifth Avenue between Cartier and Gucci. Slated to open in fall 2005, the unit boasts 50 feet of storefront, and will showcase Fendi’s product range over five floors and 10,000 square feet.

Burke noted the previous location was too large at 20,000 square feet and “on the wrong side of the street.”

Besides new locations, Fendi is unveiling a new “palazzo design” by architect Peter Marino that will replace its so-called “dark store” concept and an earlier incarnation based on blond wood. Burke declined to give specifics but said the first store showcasing Marino’s design would be Osaka, which features massive logos in rusted steel. He said each design would be tweaked for the location, with the New York town house featuring a more neoclassical facade with more discreet logos.

“It’s a departure from what you’ve seen to date at Fendi. All I can say is it’s very strong and very Roman,” Burke said.
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